The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."
Friday, July 27, 2012
Bassanese: Global currency wars could see rates go even lower
We’re not there yet, but if the Australian dollar stays high in the face of a weakening global economy, the RBA might first resort to “jawboning” markets through subtle expressions of concern about its value. The next step would be greater public display of currency intervention, which the RBA knows can have only limited effects.
But ultimately, if global interest rates continue falling, the RBA will face the delicate choice of potentially lowering interest rates by more than it would otherwise, or living with a higher than desirable exchange rate. In the face of low inflation and sluggish growth, more countries are seeking the benefits of a cheap currency. In doing so, it’s dragging down interest rates around the world and Australia may not be immune.